Cancelling the deal and the right for refund in retail and e-commerce

This article has been published in fashion business special journal Modin.

What is retail trade?

Retail is selling products to their actual users, consumers who are private persons. In Finland, retail between an entrepreneur and a consumer is regulated by the Consumer Protection Act. Selling products takes place often in small or big business premises (shop, kiosk, stand, market place, department store, super market chain). Retailers, in other words shopkeepers, own often the products they sell, but some of them are dealers selling the products (items or services) of the original seller on commission. In these cases their income is based on provisions got from actualized sales.

The E-commerce is also a form of retail, but there is no actual place of sales in the electronic commerce, so in judicial sense it is distance selling. Instead of visiting the shop, consumer gets acquainted with the product selection in the Internet, collects the wanted products in so called shopping basket and makes the order. The Post or another transport service delivers the goods to the wanted place. It might even be possible to get to know more trademarks and more exhaustive product selection than in traditional shops, which makes it more tempting to visit online stores.

Brick-and-mortar shop vs. e-commerce store

According to studies, Finnish people make more and more acquisitions in the Internet. The number of E-commerce shops increases about 25 % annually, while the number of brick-and-mortar shops is decreasing 10 % every year.

So it is no wonder that returning the products and cancelling the orders have become more common because most E-commerce shops offer free freight and return within 60 or even 90 days instead of 14 days enacted in the Consumer Protection Act.

To guarantee good customer service and to compete with the E-commerce, most shops also offer a possibility to return the items under certain terms. It is good and important to find out, when and under what circumstances the consumer has the right to return the item or cancel the purchase both in brick-and-mortar and online-shops.

Cancelling the deal and right for return when shopping in brick-and-mortar-store

Basically, buying a product means making an agreement, and the parties cannot change the agreement unilaterally. It is not usually possible to cancel the transaction, even though either party regrets it.

Products on sale apply the same rules than products with normal prise. It is possible to return the item only, if: the shop has granted replacement and returning right. It is voluntary to grant these kinds of rights, so the shop can determine the terms for replacement and cancelling, for example give an 8- or 30-day-right of return after shopping. The shop can also necessitate the receipt to be shown, in case of right of replacement or cancelling.

Rules concerning E-commerce

According to the Consumer Protection Act, when distance selling is in question (for example the E-commerce) or door-to-door selling, the consumer has a statutory right of 14 days to cancel the transaction. In distance selling there are, however, limitations in cancelling right, so the terms of the agreements should be read very carefully.

The right to cancel the purchase does not concern for example custom-made products made after customers’ wishes, audio- and video recordings or computer programmes, which seal has been opened. It is important to notice, that if the flawless product’s returning right is not agreed before making the transaction and the company still agrees to take the item back, the company has the right to demand reasonable indemnity for cancelling the trade.

Lastly

If the shop does not have (voluntary) replacement of cancelling right and the consumer is uncertain about the purchase, he can suggest making the sale on approval. In the sale on approval, the seller grants the buyer a right to return the item or replace it to another until certain day. If the seller agrees to make the sale on approval, the terms of the transaction are recommended to mark clearly in the receipt in order to avoid confusion.